We kickoff the day with Export Sales, PPI MoM & YoY, Core PPI MoM & YoY, Initial Jobless Claims, Continuing Jobless Clams, Jobless Claims 4-Week Average, PPI Ex Food, Energy and Trade, and PPI Ex Food, Energy & Trade MoM & YoY at 7:30 A.M., EIA Natural Gas Storage at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Fed Williams Speech, 15-Year & 30-Year Mortgage Rate at 11:00 A.M., and 30-Year Bond Auction at 12:00 P.M.

Photo by Jesse Gardner on Unsplash

The Bureau of Labor Statistics reported that the May CPI inflation rate at 3.3%, down from 3.4% in April. While the rate of increase in consumer prices is well below 2022 and 2023, it’s still well above the Fed’s target. Moreover, the May Consumer Price Index set a record high of 314.1 (percentage of 1982-1984), furthering eroding the purchasing power of the US dollar. Charts show us the rolling 48-month change in the US dollar purchasing power, which has lost 18.4%, or the worst decline since November 1984. Then Reaganomics took hold and the country was moving back to prosperity. A far cry from Bidenomics and his malarkey tour. The June WASDE left its corn balance sheet unchanged. The lack of adjustments made to South American corn crop sizes indicates actual yield data in Brazil is needed-yield data will be increasingly available in the next 30-days- and so in the short-term price discovery is centered exclusively in Northern Hemisphere weather patterns. Ag Resources (ARC) this week trimmed planted US corn area by 500,000 acres and maintains USDA’s 24-25 export forecast is at 100 Mil Bu too low. End stocks of 1.8 Bil Bu keep Dec corn bound to a range of $450-$520 for now. Any fall in the US corn yield below 175 bushels per acre (BPA) opens July corn futures to testing $5.00 as US corn stocks fall to 1.5-1.6 Bil Bu and minimum pipeline stocks are calculated at 1.25-1.35 Bil. Be prepared volatility-particularly excessive heat blankets in E Plains & Midwest next week and likely persists into July. ARC also pointed out major/lasting bearish trends are unlikely at $450-$460 Dec CBOT corn. WASDE lowered 24/25 global exporter carryover 1 MMT’s amid lowered projected 23/24 stocks in Russia and South Africa. No other changes of note were made. CBOT futures came in mixed today with soybean oil futures weaker, while grains are mounting a rally. Traders are closely following US weather forecasts and trying to assess the impact on yield. June looks to be one of the warmest & driest since 2000, and a sharp contrast to the spring which was one of the top ten wettest. July weather will make or breaks corn crops, and the market is adding weather premium to price amid the coming heat and lack of rainfall. However, the N Plains and the NW Midwest will see frequent “ring of fire” storm systems that produce above-normal rainfall and cloud cover allowing more highs in the 80’s. The initial heat & dryness can favor crop yields if it is followed by near or above normal July rains. However, should the hot/dry pattern continue beyond the next 10-days, Central US crop stress will dramatically increase. Remember the many Tropical Depressions causing flooding in Florida with an active Hurricane Season forecasted, and funds at record net shorts on grains.

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